On The Personal Income Tax

Taking a wide view of the current nations tax law, income tax, especially personal income tax, is a main taxation in many west developed market economic countries , an important taxation in developing countries too. Income tax plays a key role in macroscopic tax adjustment and the realization of the government's social and economic targets. Economists pay much attention to it and generally regard it as a good tax. The status of income tax in one country reflects how advanced the tax law is. However, a few people doubt this since the emerge of value added tax after 1950s and the trend of lowering income tax rate in worldwide tax reform in 1980s.In our establishment process of socialistic market economy system, it is necessary to know anew the status of income tax.The text takes a deep research on some foundational theories of personal income tax and the problems of the policy choice and system optimization.This text is divided into six parts, each part of main contents as follows:The first part expounds the personal income tax status and its functions. First, the writer analyzed the status of personal income tax on political and economic aspects; Second, analyzed the function of personal income tax on a few different aspects, such as realizing the equity of distribution by regulate the income assignment, adjusting allocation of resource to promote economic efficiency, stabilizing economy and so on; Third, we looked back upon the historical evolution of personal income tax in west countries and analyzed the differentials of personal income tax position between west countries and China. Since 1980s, despite west developed countries' tax construction which regard personal income tax as their main tax met forceful challenge from the development of merchandise tax, its status as main tax did not change. Now Chinese personal income tax is in the developing stage, its target is still set to regulate the income allotment. The functions and status of Chinese personal income tax can not place on equal footing with west developed countries' in certain period, namely weather income scale or the function of regulation, all suffer certain limit.The second part theoretically analyze the economic influence of the personal income tax and the effect. The first, analyze the family saving income effect and substitute effect. Weather the income tax influence on saving behavior is positive or negative depends on the net effect of income effect and substitute effect resulted by the tax saving. The second is the analysis of the influence on investment. It is the market interest rate and tax policy that affect the investment cost. The government can raise income tax rate to restrain investment, and also can derate tax to encourage the investment.The third is the analysis on the effect of personal income tax and labor input. The personal income tax of the fourth is the analysis on influences on technique progress. The personal income tax of the fifth is the analysis on the relationship with the equity of income assignment.The third part expatiates the principles of the personal income tax system.. First, we analyzed the general principle of the tax system design. The next in order, we make a further research on the tax system mode, tax special treatment, tax burden and the tax collection and management. On the aspect of the mode choice of tax system, we propose that government should consider not only the economic development level and the tax collection and management level, but also the historical and cultural influence on tax system. We should balance the equity and efficiency principle on the tax rate design aspect.The fourth part is the international comparison of the personal income tax system. Comparison on six aspects: the taxation mode, taxpayer, tax object, expenses deduction, tax rate construction, tax collection and management.The fifth part offers the target of how to optimize the personal income tax system. The inner optimization suggests the valuation criterions about the choice of taxpayers, t...